Why your organization’s smart dimes are worth more than its dumb dollars
A friend recently shared a Harvard Business Review article with me about the ways in which financial constraints needn’t be constraining. The article, written by Laura Huang, an associate professor of business administration at Harvard Business School, spurred me to think about the role money plays in business and marketing, particularly as it relates to creativity and resourcefulness.
It’s always fascinating to see how necessity inspires breakout solutions. Times like these, of course, are forcing enterprises to do many things they should have been doing all along.
John Albers, the CEO of Dr Pepper during my tenure at the brand, had a reputation for being a charismatic and decisive leader. I was the company’s CMO for almost eight years and I will remember Albers as one of my greatest teachers. He always asserted that you should self-examine for complacency and excess when times are good.
Human nature makes us inherently optimistic, and we almost always underestimate the negative impact of a threat. When a leader can beat back that instinct with restraint and discipline, their decisions are almost always better. The best time to make tough decisions is before they are necessary. Albers’ organizations put in a lot of sweat—trust me—but bled very little. This dynamic is a close cousin to the concept in the HBR article.
Early in my career at Leo Burnett, I developed a perspective on the role of financial resources that was counter to the management at the time. During this period, Leo was the single largest buyer of network media in the world. Bill Hadlock, then-executive in charge of media planning and buying at Leo Burnett, used to say that, “Dumb dollars beat smart dimes”—and it made the hair on the back of my neck stand up. It just sounded lazy to me, but that was before the digitization of a network-based world, e-commerce and social media. In those days, media dollars were used by our big-spending clients to dominate the airwaves and we were trained to worship at the altar of Share of Voice. In those days, our income was typically a function of the size of the budget. It was common practice but made little sense to me.
During my stint at Leo Burnett, I worked with budgets that ranged from a few million dollars to more than $100 million. Later, as president of Burger King, I controlled half a billion dollars in global marketing expenditures.
I have failed with big budgets and succeeded with almost no budget. When teams would come to me saying they needed more money for this or that, I would say the same thing every time: “Show me the idea.” If the idea is powerful, we’ll find the money for it. If it isn’t, don’t tell me it can’t work if we don’t spend enough.
Roger Blackwell, arguably the most prolific marketing academic next to Phil Kotler and Jagdish Sheth, wrote a book called Saving America about the future of innovation and employment in the U.S. I’ll never forget one of his learned observations of why entrepreneurs fail: too much capital (TMC). Using numerous examples, he shows how well-heeled start-ups squandered their treasuries because they weren’t afraid enough. According to his book, the dangers of TMC include:
- Permitting entrepreneurs to produce what they want to make instead of understanding what customers will buy.
- Funding entrepreneurs to operate without finding ways to lower costs.
- Delaying or prevents entrepreneurs from building efficient demand chains.
- Encouraging marketing programs based on attributes entrepreneurs value most instead of attributes customers value most.
- Focusing attention on satisfying investors instead of satisfying customers
- Allowing firms to muddle along without doing the right things right until eventually they fail or are owned by someone other than the founder.
- Allowing firms the luxury of burning cash until incinerated by failure.
I’m not naive to the power that money has as a force in marketing, but no brand is famous because they spend a lot of money. In my opinion, smart dimes beat dumb dollars every time.
It’s why design-led enterprises that nurture cultures of ideation and problem-solving run circles around thick-ankled, muscle-bound behemoths for whom throwing money at everything is a default instinct.
“Just tell me what the idea is” should be the opening statement for every budget meeting.
Photo by Shot by Cerqueira on Unsplash.